Sterling Heights approves Arsenal Alliance interlocal agreement with Warren to bolster defense sector

Sterling Heights City Council approved an interlocal agreement with the City of Warren on a special morning meeting to form the "Arsenal Alliance," a three-year partnership to coordinate defense-related economic development in Macomb County.

The agreement, approved by voice vote, authorizes the mayor and city clerk to sign and directs the two cities to share costs for consultants and to create a five-member executive committee to guide the effort.

The partnership is intended to build on the presence of TACOM and the Ground Vehicle Systems Center (GVSC) in neighboring Warren and to leverage Macomb County's existing defense supply chain. "The defense industry, specifically in Macomb is a $60,000,000,000 plus industry," said Luke Bonner, the city's senior economic development advisor, citing local contract volume and employment concentration in armored-vehicle manufacturing.

Bonner told the council the alliance would pool resources for research and analysis, stakeholder engagement, workforce development and marketing to attract defense contractors and suppliers. He said the cities anticipate mutual cost-sharing for consultants or firms that would provide industry research, advocacy and program support.

Jennifer Varney provided a financial overview tied to the Local Development Finance Authority (LDFA), saying the defense partnership would be paid 50% by the LDFA and that the LDFA projection includes a $250,000 allocation for the effort in year one with assumed inflationary increases in subsequent years. Varney said the LDFA captures tax-increment revenue from three parcels in the district — BAE Systems, Sterling Enterprise Park and the SHAP paint facility — and that roughly $2,000,000 in tax increment is captured annually (tax capture is limited to increases in taxable value since the LDFA base year). She said the five-year projection shows about $2,000,000 remaining in fund balance for district investments after the partnership and other assumed expenditures.

Under the interlocal agreement, each city will appoint two members to the executive committee; the two councils will jointly approve an at-large fifth member, producing a five-person body that will handle contracting and oversight for the initiative. City Manager Vanderpool and the city attorney clarified that the agreement prohibits elected officials from serving on the executive committee and that initial terms are three years, with appointment changes handled by the respective councils at their discretion.

Councilmembers who spoke at the meeting framed the alliance as a regional economic strategy. Councilmember Radke said the partnership could be a model for municipal cooperation and help expand manufacturing opportunities in the county. Councilwoman Zarko said the agreement "makes sense" and noted the defense corridor runs through both cities. Councilwoman Koski asked for clarification on LDFA and SmartZone boundaries; staff said the district runs roughly from 14 Mile to 18.5 Mile and from Van Dyke to Mound and that tax capture applies only to increases since the base year.

Bonner listed other regional assets he said the alliance could knit together, including the National Advanced Mobility Consortium at Velocity, the Advanced Manufacturing Commercialization Center and nearby research centers. He said workforce gaps — including demand for AI-related engineering roles — are among the issues the partnership will study.

Councilmember Arco moved to approve the interlocal agreement; the motion was seconded and adopted by voice vote. The council announced a joint press conference with Warren at 1 p.m. the same day to present the initiative.

The agreement does not itself create new tax levies or change the LDFA boundary; it establishes a governance and funding framework to coordinate economic-development work between Sterling Heights and Warren. Next steps noted at the meeting include creation of the executive committee, contracting for consultant support and reporting back to both councils on performance and expenditures.